Debt and Financial Optimism in the UK Continue

With £1.3 trillion pounds worth of debt in the UK, Scotland's Citizens Advice Bureau has welcomed a new Bill to regulate lenders and protect borrowers from creating un-repayable levels of personal debt.

Chief executive Kaliani Lyle said: "For years, Citizens Advice Bureaux have been dealing with case after case of ordinary people who have been enticed into unsustainable debt."

"The existing legislation - the 1974 Consumer Credit Act - is simply too antiquated to deal with the explosion in aggressively marketed credit that has taken place over the past decade or so."

The Consumer Credit Act is set up to outlaw "extortionate" interest rates, however it has proved to be ineffective as it doesn't actually define what is regarded as extortionate.

This coincides with an investigation being carried out by banking watchdogs, into suspected mis-selling of personal loans and credit cards at bank branch levels. Following on from the BBC's Real Story programme which revealed banks are offering large staff bonuses to encourage sales of expensive loans, credit cards and other financial products. Staff at Lloyds TSB were shown to have encouraged customers to accept sums of money they could not afford to repay.

"Which?" said it believed it was time the industry had a proper debate over sales incentive structures.

The BBC also criticised the expensive cost of the bank's payment protection insurance and how credit cards were pushed onto customers.

Graeme Millar, of the Scottish Consumer Council, said: "Consumers themselves need to act responsibly and ensure they are not asking for money they cannot afford to repay."

Tougher codes of practice imposing stricter standards on the way products are sold, and the use of financial information qualified financial advisers and from comparison web sites like Moneynet can help to gain consumers the best deals, and reduce the risks of mis-selling.

Independent financial adviser, Alan Steele commented, "Debt has always been a problem for a minority of people. One of the current problems is the willingness of bank managers to hand out loans and credit cards, which means this minority has increased, but the majority are coping with their debt."

It remains to be seen whether the nation's optimistic mood, recently reflected in a Mori survey carried out for the Prudential, in its ability to cope with levels of personal debt is long or short term. The report showed consumers are still failing to save, with one in five people saying they had no plans to increase the amount they put away.

Jackie Ronson, of the Prudential, said that many people are viewing their disposable income as decreasing, and yet they are happy to maintain their current level of debt, "add to that the continued concern about pensions in the UK, and we are looking at people who are likely to seriously struggle in retirement."

Additional Resources
The Scotsman
BBC

Richard works in Edinburgh for a media company, occasionally writing for the personal finance blog Cashzilla, and drinking too much coffee.

BBC News
Progress seen in debt relief for poor countries
Pakistan Dawn, Pakistan - Sep 4, 2008
By Masood Haider UNITED NATIONS, Sept 4: A new UN report finds significant progress in providing debt relief to the world’s poorest countries. ...
Poverty-reduction aid lags, study finds Los Angeles Times
DEVELOPMENT: UN Warns of Faltering Goals on Aid, Trade IPS
Donors’ Aid to Poor Nations Declines, UN Reports New York Times
UN News Centre - Reuters South Africaall 184 news articles

NECN
Hurricane Relief Efforts Create Red Cross Debt, Nonprofit Says
Washington Post, United States - 14 hours ago
By Philip Rucker The American Red Cross said this morning it is going deep into debt to fund a $70 million Hurricane Gustav relief effort, ...
Red Cross National Relief Fund In The Red First Coast News
all 263 news articles

Bankruptcy lawyers can advise clients on debt-court
Reuters - 14 hours ago
The amendment in dispute prohibits debt-relief agencies from giving clients advice about taking on more debt before filing for creditor protection. ...
8th Circuit: Bankruptcy Provision Violates Lawyer Free Speech Rights ABA Journal
all 5 news articles

Handloom weavers may get debt relief
Business Standard, India - Sep 2, 2008
After the debt waiver scheme for farmers, the Union government is hoping to extend a similar scheme for handloom weavers. The Union textiles ministry, ...

Fitch Rates Mississippi's $230MM GOs 'AA'; Outlook Stable
Ad-Hoc-News (Pressemitteilung), Germany - 9 hours ago
The state's net tax supported debt of $4.55 billion, inclusive of GO and appropriation-backed debt, represents a moderate but above average burden on ...

Gene F. Turnwald: Debt relief might be less than it promises
Lansing State Journal, MI - Sep 2, 2008
I ask you to please keep that in mind when dealing with debt relief companies that guarantee to lower your credit card or loan payments and interest rates. ...

Minyanville.com
Bill Gross to Treasury: Please Help
Motley Fool - 9 hours ago
Not necessarily because the assets are worth such paltry amounts, but because so many assets were leveraged to the gills in debt. ...
Pimco’s Gross wants household bailouts CNNMoney.com
all 39 news articles

Group advocates tax increases and non-user fees for sewer debt relief
The Birmingham News - al.com, AL - Aug 29, 2008
At a morning press conference, the group put forward "the people's plan," an 11-point proposal for dealing with the debt. The activists, including a ...

Staying On Track with Your Debt Relief Plan
3x24 - Your Newspaper and News Magazine, Germany - Aug 29, 2008
All these things, however, pale in comparison with the importance of sticking to and staying focused on your debt relief plan. Sticking with a debt relief ...
4 Simple Steps To Getting Rid Of Credit Card Debt 3x24 - Your Newspaper and News Magazine
Settling Credit Card Debt: Choosing the Right Words 3x24 - Your Newspaper and News Magazine
all 3 news articles

VISIONS OF AN OIL-RICH GHANA - NOT COMPARISONS OF FAILED 4TH
Modern Ghana, Ghana - Sep 4, 2008
Mpaninfuo, the truth of the matter is that none of the political parties you are so enamoured with, had the nous or the imagination, to think of debt relief ...

Wind Chimes and more...

Windchimes for great gifts!

Life After Debt ? Strategies for Dealing with Problem Debt